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The year is ending and most companies are evaluating the year’s results and ramping up for the new year…new business plans and new budgets. The new year is also a time when many companies start organizing their yearly performance review process.

As a HR professional, I’ve heard the groans whenever I mention “performance reviews” and I do understand. The yearly, or in some companies twice a year, performance reviews take a lot of time. Since most companies have some form of performance review process, you have to ask what is gained by their yearly ritual.

The performance review tool is used for compensation and promotion assessment, creating goals for employees to drive the business and could include employee development in the mix. A tall order for a document that is generated once a year.

Most companies have two components to the individual employee review process…last year’s performance and goals for the coming year. Last year’s performance evaluation is helpful is assessing the overall performance of an employee in meeting their deliverables. Managers can use this information to coach an employee to higher performance levels.

The second part of the review is creating goals for the coming year for each employee. The employee’s goals support the department goals that are fed into corporate goals. So…just how effective are the annual performance review rituals?

Performance reviews do serve a function…even if they are not entirely effective and can be frustrating. Employees need to be evaluated on their performance. Yes, it would be great if managers had the time to reinforce or counsel employees regularly, but they don’t, nor do they prioritize those activities. Performance reviews are a second best solution. Check out The The Manager’s Guide to Performance Reviewsby Robert Bacal. This book helps managers make reviews both positive and proactive. It provides a step-by-step process for administering an effective performance review.

Then there are companies that don’t want any part of this process and have created their own evaluation solutions. For provocative reading…try Abolishing Performance Appraisals: Why They Backfire and What to Do Insteadby Tom Coens (Author), Mary Jenkins (Author), Peter Block (Foreword). The authors argue that appraisals do not accomplish what they are supposed to and that, in fact, they are counterproductive. They offer compelling evidence to demonstrate that appraisals backfire as they examine the five functions (coaching, feedback, setting pay, determining promotions, and documentation) for which appraisals are designed.

If you are responsible for managing employees, then learn how to do it the best way you can. Feedback is critical for building relationships with your team. Since performance reviews are a normal part of doing business, why not learn more about this process so that you can effectively coach and motivate your employees.

Note: Employees want feedback around their performance as well as direction from their managers.

My next posts will offer you guidance on how to provide the best performance review possible.

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